Federal Electricity Proposal Risky for Consumers

WASHINGTON - The Consumer Federation of America (CFA) and Consumers
Union (CU) today expressed their opposition to the Federal Energy
Regulatory Commission (FERC)'s proposed Standard Electricity Market
Design (SMD), saying that it is not in the public interest. The SMD is
FERC's attempt to standardize the structure and operation of the
wholesale electricity market nationwide. FERC proposed SMD in response
to the meltdown in the western electricity market in 2000 and 2001,
which was caused, in part, by FERC's failure to properly oversee
companies operating in that market.

In comments submitted today responding to FERC's Notice of Proposed
Rulemaking on an SMD, CFA and CU stated that the proposal violates the
Federal Power Act's requirement that electricity rates be just and
reasonable and would not protect consumers from the type of
manipulative behavior engaged in by energy traders such as Enron during
2000 and 2001.

In fact, a report prepared for a November 12th hearing of the Senate
Committee on Governmental Affairs actually concluded that the FERC
"lacked the will and resources to oversee Enron and other
politically-powerful energy companies as U.S. electricity markets
deregulated in the mid-1990s." The comments filed today argue that
little has changed at FERC since that would make consumers feel more
protected under the further deregulation proposed by FERC's SMD.

In their comments, CFA and CU state, "Electricity markets around the
country are in turmoil and consumers' electricity service is becoming
more costly and risky. Rather than bring stability to markets, this
proposal will introduce more costs and more risks for consumers."

Consumers Union, publisher of Consumer Reports magazine, is an
independent nonprofit testing, educational and information organization
serving only the consumer. We are a comprehensive source of unbiased
advice about products and services, personal finance, health, nutrition
and other consumer concerns. Since 1936, our mission has been to test
products, inform the public and protect consumers

CFA is a non-profit association of more than 300 organizations that,
since 1968, has sought to advance the consumer interest through
advocacy and education